Barclays Plc shareholders can look forward to greater returns of capital in the future, according to CEO Jes Staley, after a jump in dividends and an improved capital ratio sent the lender's shares higher despite a full-year 2017 loss.
"It is our firm intent over time to return a greater proportion of earnings to shareholders," Staley said during a full-year 2017 earnings call, as the bank announced that it would be raising the dividend to 6.5 pence per share in 2018 after holding it flat at 3 pence per share for 2016 and 2017.
Saying that the higher dividend in 2018 is "the first demonstration of that commitment," he added: "While this is an important first step, it still represents a fairly modest proportion of the projected earnings for Barclays as we deliver on our strategy."
Share buybacks, which Barclays has not used in the past 20 years, will be an important part of the "capital returns mix" in the future, the CEO said.
'Fairly awful' Q4 results
Barclays shares traded up more than 6% at one stage Feb. 22 and eventually closed with a gain of 4.4%, making them the benchmark FTSE 100's second-biggest riser even though the bank had reported earlier in the day that it had made a loss of £1.92 billion in 2017, compared to a profit of £1.62 billion in 2016. But analysts had reservations about the underlying performance.
"A promise to double the dividend this year has naturally got the market very excited, but revenues at the U.K. bank have actually flatlined, while the international division is flagging," Laith Khalaf, senior analyst at stockbrokers Hargreaves Lansdown, said in a Feb. 22 note. "In particular the investment bank looks like a casino where the house isn't winning."
Full-year net interest income at Barclays U.K. was up 1% year over year at £6.09 billion, while the division's pretax profit also rose 1% to £1.75 billion. Pretax profit at Barclays International was down 4% to £3.28 billion, while net interest income declined 5% to £4.31 billion.
Barclays took a one-off hit from a net tax charge of £901 million as a result of U.S. tax reforms, plus a £2.53 billion loss linked to its sell-down of Barclays Africa Group.
"It should be no surprise to anyone that Barclays' [fourth-quarter] 2017 results are fairly awful," Ian Gordon, an analyst covering U.K. banks for Investec, said in a Feb. 22 note.
But the intention to boost the dividend is an "encouraging signal" and beats Investec's existing forecast of a dividend of 5 pence per share, he added. Investec has given Barclays stock a "buy" rating.